Reported diluted earnings per share (EPS) were $0.94 with 58.9 million
weighted average shares outstanding, compared with reported diluted
EPS in the fourth quarter of 2017 of $6.81 with 62.7 million weighted
average shares outstanding; Adjusted diluted EPS increased 29.9% to
$1.00.
[(1)]

G&W repurchased approximately 2.4 million shares of its Class A Common
Stock for $189.6 million during the fourth quarter of 2018.

North America: Operating revenues from G&W's North American Operations
increased 5.5% to $338.0 million from $320.2 million. Reported
operating income from G&W's North American Operations increased 16.7%
to $87.2 million; Adjusted operating income from G&W's North American
Operations increased 18.1% to $89.3 million.
[(1)]

Australia: Operating revenues from G&W's Australian Operations
decreased 5.8% to $71.1 million from $75.5 million. Reported operating
income from G&W's Australian Operations remained relatively flat at
$17.7 million. Adjusted operating income from G&W's Australian
Operations decreased 21.2% to $17.7 million.
[(1)]

U.K./Europe: Operating revenues from G&W's U.K./European Operations
decreased 5.3% to $166.5 million from $175.8 million. Revenues in the
fourth quarter of 2017 included $12.2 million of revenues from G&W's
Continental Europe intermodal business, ERS Railways B.V. (ERS), which
was sold in June 2018. Reported operating income from G&W's
U.K./European Operations, which included $0.8 million in 2017 from
ERS, decreased to $0.8 million, compared with $14.2 million in 2017;
Adjusted operating income from G&W's U.K./European Operations
decreased 51.8% to $2.8 million.
[(1)]

Jack Hellmann, Chairman and CEO of G&W, commented, “In the fourth
quarter of 2018, our reported diluted EPS were $0.94 compared with $6.81
in the fourth quarter of 2017. Our adjusted diluted EPS increased 30% to
$1.00 in the fourth quarter of 2018, led by a 17% increase in our North
American operating income due to 5.8% growth in carloads and a 250 basis
point improvement in our operating ratio. The strong results in North
America more than offset weaker performance in our Australian and
U.K./European operations.”
[(1)]

“In addition to solid earnings growth, G&W generated record cash flow in
2018. With strong cash generation, which significantly exceeded our
reported net income, and approximately $455 million of availability
under our revolving credit facility, we continue to evaluate potential
investments in multiple geographies as well as investments in our own
shares. During the fourth quarter of 2018, we repurchased 2.4 million
shares of our common stock for approximately $190 million.”

Financial Results

G&W's operating revenues increased $4.0 million, or 0.7%, to $575.6
million, in the fourth quarter of 2018, compared with $571.6 million in
the fourth quarter of 2017. G&W's reported operating income in the
fourth quarter of 2018 was $105.7 million, compared with $106.5 million
in the fourth quarter of 2017. Excluding the net impact of certain items
affecting comparability between periods as discussed below, G&W's
adjusted operating income in the fourth quarter of 2018 was $109.9
million, compared with $104.0 million in the fourth quarter of 2017.
[(1)]

Reported net income attributable to G&W in the fourth quarter of 2018
was $55.6 million, compared with $426.6 million in the fourth quarter of
2017. Excluding the net impact of certain items affecting comparability
between periods as discussed below, adjusted net income attributable to
G&W in the fourth quarter of 2018 was $59.1 million, compared with $48.6
million in the fourth quarter of 2017.
[(1)]

G&W's reported diluted EPS in the fourth quarter of 2018 were $0.94 with
58.9 million weighted average shares outstanding, compared with reported
diluted EPS in the fourth quarter of 2017 of $6.81 with 62.7 million
weighted average shares outstanding. Excluding certain items affecting
comparability listed below, G&W's adjusted diluted EPS in the fourth
quarter of 2018 were $1.00 with 58.9 million weighted average shares
outstanding, compared with adjusted diluted EPS in the fourth quarter of
2017 of $0.77 with 62.7 million weighted average shares outstanding.
[(1)]

Items Affecting Comparability

In the fourth quarter of 2018 and 2017, G&W’s results included certain
items affecting comparability between the periods that are set forth in
the following table (in millions, except per share amounts).

Income/(Loss)Before IncomeTaxes Impact

After-Tax NetIncome/(Loss)Attributableto
G&WImpact

Diluted EPSImpact

Three Months Ended December 31, 2018

Restructuring and related costs

$

(2.2

)

$

(1.7

)

$

(0.03

)

Canadian railroad lease return costs

$

(2.1

)

$

(1.5

)

$

(0.02

)

Gain on sale of investment

$

1.4

$

1.0

$

0.02

Prior period tax adjustments

$

—

$

(1.4

)

$

(0.02

)

Three Months Ended December 31, 2017

Buyout of Freightliner deferred consideration agreements

$

8.9

$

8.9

$

0.14

Australia impairment and related costs

$

(4.9

)

$

(1.8

)

$

(0.03

)

Restructuring costs

$

(1.4

)

$

(1.2

)

$

(0.02

)

Corporate development and related costs

$

(1.1

)

$

(0.7

)

$

(0.01

)

U.K. coal restructuring and related charges

$

1.1

$

0.9

$

0.01

Impact of U.S. Tax Cuts and Jobs Act (TCJA)

$

—

$

371.9

$

5.94

In the fourth quarter of 2018, G&W’s results included $2.2 million of
restructuring and related costs, primarily in the U.K., lease return
costs of $2.1 million associated with two railroad leases in Canada that
expired in the fourth quarter of 2018, a $1.4 million gain on sale of an
investment and $1.4 million of tax adjustments associated with prior
periods.

In the fourth quarter of 2017, G&W’s results included an $8.9 million
reduction to other expenses as a result of the buyout of the
Freightliner Group Limited (Freightliner) deferred consideration
agreements with certain former Freightliner management holders,
Australia impairment and related charges of $4.9 million, which included
$5.9 million related to the write-down of track assets on idle branch
lines in South Australia, partially offset by a $0.9 million recovery of
prior year impairment and related costs associated with Arrium Limited's
voluntary administration, $1.4 million of restructuring costs, $1.1
million of corporate development and related costs and a $1.1 million
reduction to expense associated with a prior year accrual established
for the restructuring of our U.K. coal business. The fourth quarter of
2017 also included a $371.9 million estimated income tax benefit
primarily as a result of reducing the value of our net deferred tax
liabilities from a 35% U.S. federal income tax rate to the newly enacted
rate of 21% associated with the TCJA signed into law in December 2017.

Fourth Quarter Results by Segment

Operating revenues from G&W's North American Operations increased $17.8
million, or 5.5%, to $338.0 million in the fourth quarter of 2018,
compared with $320.2 million in the fourth quarter of 2017.

G&W's North American Operations had operating income in the fourth
quarter of 2018 of $87.2 million, compared with $74.7 million in the
fourth quarter of 2017. The operating ratio for North American
Operations was 74.2% in the fourth quarter of 2018, compared with an
operating ratio of 76.7% in the fourth quarter of 2017. Adjusted
operating income from G&W's North American Operations in the fourth
quarter of 2018 was $89.3 million, compared with $75.6 million in the
fourth quarter of 2017. The adjusted operating ratio for North American
Operations was 73.6% in the fourth quarter of 2018, compared with 76.4%
in the fourth quarter of 2017.
[(1)]

Operating revenues from G&W's Australian Operations decreased $4.4
million, or 5.8%, to $71.1 million in the fourth quarter of 2018,
compared with $75.5 million in the fourth quarter of 2017. Excluding a
$5.0 million decrease due to the impact of foreign currency
depreciation, Australian Operations revenues increased by $0.6 million,
or 0.8%.
[(2)]

G&W's Australian Operations had operating income in the fourth quarter
of 2018 of $17.7 million, compared with $17.6 million in the fourth
quarter of 2017. The operating ratio for Australian Operations was 75.1%
in the fourth quarter of 2018, compared with an operating ratio of 76.7%
in the fourth quarter of 2017. Adjusted operating income from G&W's
Australian Operations in the fourth quarter of 2018 was $17.7 million,
compared with $22.5 million in the fourth quarter of 2017. The adjusted
operating ratio for Australian Operations was 75.1% in the fourth
quarter of 2018, compared with 70.2% in the fourth quarter of 2017.
[(1)]

Operating revenues from G&W's U.K./European Operations decreased $9.3
million, or 5.3%, to $166.5 million in the fourth quarter of 2018,
compared with $175.8 million in the fourth quarter of 2017. Excluding
$12.2 million from G&W's divested ERS operations for the fourth quarter
of 2017 and a $5.2 million decrease due to the impact of foreign
currency depreciation, U.K./European Operations same railroad revenues
increased $8.1 million, or 5.1%.
[(2)]

G&W's U.K./European Operations had operating income in the fourth
quarter of 2018 of $0.8 million, compared with $14.2 million in the
fourth quarter of 2017, which included $0.8 million from ERS. The
operating ratio for U.K./European Operations was 99.5% in the fourth
quarter of 2018, compared with 91.9% in the fourth quarter of 2017.
Adjusted operating income from G&W's U.K./European Operations in the
fourth quarter of 2018 was $2.8 million, compared with $5.9 million in
the fourth quarter of 2017, which included $1.3 million from ERS. The
adjusted operating ratio for U.K./European Operations was 98.3% in the
fourth quarter of 2018, compared with 96.7% in the fourth quarter of
2017.
[(1)]

Consolidated Annual Results

2018 Annual Segment Highlights Compared with 2017

North America: Operating revenues from G&W's North American Operations
increased 6.6% to $1,358.9 million from $1,274.3 million. Reported
operating income from G&W's North American Operations increased 12.8%
to $343.1 million from $304.3 million; Adjusted operating income from
G&W's North American Operations increased
[]
10.7%
[]
to
$346.3 million from $312.9 million.
[(1)]

Australia: Operating revenues from G&W's Australian Operations
decreased 1.9% to $301.7 million from $307.5 million. Reported
operating income from G&W's Australian Operations increased 3.9% to
$80.3 million from $77.3 million; Adjusted operating income from G&W's
Australian Operations decreased to $73.1 million from $82.2 million.
[(1)]

U.K./Europe: Operating revenues from G&W's U.K./European Operations
increased 9.9% to $688.0 million from $626.2 million, primarily due to
new operations from the Pentalver Transport Limited (Pentalver)
acquisition, as well as a $19.3 million benefit from foreign currency
appreciation. Reported operating income from G&W's U.K./European
Operations decreased to $0.1 million from $10.5 million; Adjusted
operating income from G&W's U.K./European Operations increased to
$15.3 million from $13.8 million.
[(1)(2)]

G&W's provision for income taxes for the year ended December 31, 2018
was $64.5 million compared with a benefit from income taxes of $261.3
million for the year ended December 31, 2017. The income tax provision
for the year ended December 31, 2018 included an income tax benefit of
$31.6 million associated with the retroactive extension of the United
States Short Line Tax Credit for fiscal year 2017, which was enacted in
February 2018, income tax expense adjustments of $5.1 million related
primarily to deferred income taxes recorded in prior periods and a $1.6
million measurement period adjustment to the one-time transition (toll)
tax on earnings of certain foreign subsidiaries. The benefit from income
taxes for year ended December 31, 2017 included an income tax benefit of
approximately $394 million resulting from reducing the value of our net
deferred tax liabilities from a 35% United States federal income tax
rate to the newly enacted rate of 21%, partially offset by an estimated
transitional (toll) tax of approximately $22 million, both associated
with the TCJA.

Reported net income attributable to G&W for the year ended December 31,
2018 was $244.4 million, compared with $549.1 million for the year ended
December 31, 2017. Excluding the impact of certain items affecting
comparability listed below, adjusted net income attributable to G&W for
the year ended December 31, 2018 was $233.6 million, compared with
$182.0 million for the year ended December 31, 2017.
[(1)]

G&W’s diluted EPS for the year ended December 31, 2018 were $4.03 with
60.6 million weighted average shares outstanding, compared with diluted
EPS of $8.79 with 62.5 million weighted average shares outstanding for
the year ended December 31, 2017. Excluding certain items affecting
comparability listed below, G&W’s adjusted diluted EPS for the year
ended December 31, 2018 were $3.85 with 60.6 million weighted average
shares outstanding, compared with adjusted diluted EPS of $2.91 with
62.5 million weighted average shares outstanding for the year ended
December 31, 2017.
[(1)]

G&W’s 2018 and 2017 annual results included certain items affecting
comparability between the periods that are set forth in the following
table (in millions, except per share amounts).

Income/(Loss)Before IncomeTaxes Impact

After-Tax NetIncome/(Loss)Attributableto
G&WImpact

Diluted EPSImpact

Year Ended December 31, 2018

Corporate development and related costs

$

(0.8

)

$

(0.6

)

$

(0.01

)

Restructuring and related costs

$

(15.1

)

$

(12.2

)

$

(0.20

)

Credit facility refinancing-related costs

$

(2.7

)

$

(2.0

)

$

(0.03

)

Gain on settlement

$

7.3

$

2.6

$

0.04

Loss on sale of business

$

(1.4

)

$

(1.4

)

$

(0.02

)

Canadian railroad lease return costs

$

(2.1

)

$

(1.5

)

$

(0.02

)

Gain on sale of investment

$

1.4

$

1.0

$

0.02

2017 Short Line Tax Credit

$

—

$

31.6

$

0.52

Prior period tax adjustment

$

—

$

(5.1

)

$

(0.08

)

TCJA measurement period adjustment

$

—

$

(1.6

)

$

(0.03

)

Year Ended December 31, 2017

Corporate development and related costs

$

(11.9

)

$

(8.1

)

$

(0.13

)

Restructuring costs

$

(10.2

)

$

(9.0

)

$

(0.14

)

Australia impairment and related costs

$

(4.9

)

$

(1.8

)

$

(0.03

)

Buyout of Freightliner deferred consideration agreements

$

8.9

$

8.9

$

0.14

Gain on sale of investment

$

1.6

$

1.0

$

0.02

U.K. coal restructuring and related charges

$

1.1

$

0.9

$

0.01

Impact of TCJA

$

—

$

371.9

$

5.96

Recognition of unrecognized tax benefits

$

—

$

3.3

$

0.05

Adjusted Free Cash Flow Measures
[(1)]

Adjusted free cash flow measures for the years ended December 31, 2018
and 2017 were as follows (in millions):

Allocation of adjusted cash flow to noncontrolling interest
(Macquarie Infrastructure and Real Assets' (MIRA) 48.9% equity
ownership of G&W Australia Holdings LP (GWA) since December 1,
2016) is calculated as 48.9% of the total of (i) cash flow
provided by operating activities of G&W’s Australian Operations,
less (ii) net purchases of property and equipment of G&W’s
Australian Operations. The timing and amount of actual
distributions, if any, from GWA to G&W and MIRA made in any given
period will vary and could differ materially from the amounts
presented. During the year ended December 31, 2018, GWA made
A$65.0 million of such distributions of which A$33.2 million (or
$24.6 million at the applicable exchange rates at the time the
payments were made) and A$31.8 million (or $23.6 million at the
applicable exchange rates at the time the payments were made) was
distributed to G&W and MIRA, respectively, and no such
distributions were made for the year ended December 31, 2017. G&W
expressly disclaims any direct correlation between the allocation
of adjusted cash flow to noncontrolling interest and actual
distributions made in any given period.

(b)

Core capital expenditures represent purchases of property and
equipment, as presented on the Consolidated Statement of Cash
Flows, less grant proceeds from outside parties, insurance
proceeds for the replacement of assets and proceeds from
disposition of property and equipment, each of which as presented
on the Consolidated Statement of Cash Flows, less new business
investments and grant funded projects.

(c)

Grant funded projects represent purchases of property and
equipment for projects partially or entirely funded by outside
parties, net of grant proceeds from outside parties as presented
on the Consolidated Statement of Cash Flows.

Share Repurchase Program

During the fourth quarter of 2018, G&W repurchased 2.4 million shares of
Class A Common Stock for $189.6 million, which resulted in a reduction
of 0.8 million shares in our weighted average diluted shares outstanding
for the fourth quarter of 2018. During the year ended December 31, 2018,
G&W repurchased 6.0 million shares of Class A Common Stock for $460.1
million, which resulted in a reduction of 2.4 million shares in our
weighted average diluted shares outstanding for the year ended December
31, 2018.

Conference Call and Webcast Details

As previously announced, G&W’s conference call to discuss financial
results for the fourth quarter of 2018 will be held on Wednesday,
February6, 2019, at 11 a.m. EST. The dial-in number for the
teleconference in the U.S. is (800) 230-1085; outside the U.S. is (612)
288-0329, or the call may be accessed live over the Internet (listen
only) at www.gwrr.com/investors.
Management will be referring to a slide presentation that will also be
available at gwrr.com/investors. The webcast will be archived at www.gwrr.com/investors
until the following quarter’s earnings press release. Telephone replay
is available for 30 days beginning at 1 p.m. EST on February6, 2019 by
dialing (800) 475-6701 (or outside the U.S., dial 320-365-3844). The
access code is 458664.

G&W's seven North American regions serve 41 U.S. states and four
Canadian provinces and include 114 short line and regional freight
railroads, with more than 13,000 track-miles.

G&W's Australia Region serves New South Wales, the Northern Territory
and South Australia and operates the 1,400-mile Tarcoola-to-Darwin
rail line. The Australia Region is 51.1% owned by G&W and 48.9% owned
by a consortium of funds and clients managed by Macquarie
Infrastructure and Real Assets.

G&W's U.K./Europe Region includes the U.K.'s largest rail maritime
intermodal operator and second-largest freight rail provider, as well
as regional services in Continental Europe.

G&W subsidiaries and joint ventures also provide rail service at more
than 40 major ports, rail-ferry service between the U.S. Southeast and
Mexico, transload services, contract coal loading, and industrial
railcar switching and repair.

From time to time, we may use our website as a channel of distribution
of material company information. Financial and other material
information regarding G&W is routinely posted on and accessible at www.gwrr.com/investors.
In addition, you may automatically receive email alerts and other
information about us by enrolling your email address in the "Email
Alerts" section of www.gwrr.com/investors.
The information contained on or connected to our Internet website is not
deemed to be incorporated by reference in this press release or filed
with the United States Security and Exchange Commission.

Cautionary Statement Concerning Forward-Looking Statements

This press release contains forward-looking statements regarding future
events and the future performance of Genesee & Wyoming Inc. that are
based on current expectations, estimates and projections about our
industry, management’s beliefs and assumptions made by management. Words
such as “anticipates,” “intends,” “plans,” “believes,” “could,”
“should,” “seeks,” “expects,” “will,” “estimates,” “trends,” “outlook,”
variations of these words and similar expressions are intended to
identify these forward-looking statements. These statements are not
guarantees of future performance and are subject to certain risks,
uncertainties and assumptions that are difficult to forecast, including
the following: risks related to the operation of our railroads; severe
weather conditions and other natural occurrences, which could result in
shutdowns, derailments, railroad network and port congestion or other
substantial disruption of operations; customer demand and changes in our
operations or loss of important customers; exposure to the credit risk
of customers and counterparties; changes in commodity prices;
consummation and integration of acquisitions; economic, political and
industry conditions, including employee strikes or work stoppages;
retention and contract continuation; legislative and regulatory
developments, including changes in environmental and other laws and
regulations to which we or our customers are subject; increased
competition in relevant markets; funding needs, funding costs and
financing sources, including our ability to obtain government funding
for capital projects; international complexities of operations, currency
fluctuations, finance, tax and decentralized management; challenges of
managing rapid growth including retention and development of senior
leadership; unpredictability of fuel costs; susceptibility to and
outcome of various legal claims, lawsuits and arbitrations; increase in,
or volatility associated with, expenses related to estimated claims,
self-insured retention amounts and insurance coverage limits;
consummation of new business opportunities; decrease in revenues and/or
increase in costs and expenses; susceptibility to the risks of doing
business in foreign countries; uncertainties arising from a referendum
in which voters in the United Kingdom (U.K.) approved an exit from the
European Union (E.U.), commonly referred to as Brexit; our ability to
integrate acquired businesses successfully or to realize the expected
synergies associated with acquisitions; risks associated with
substantial indebtedness; failure to maintain satisfactory working
relationships with partners in Australia; failure to maintain an
effective system of internal control over financial reporting as well as
disclosure controls and procedures and other risks including, but not
limited to, those noted in our 2017 Annual Report on Form 10-K and our
Quarterly Reports on Form 10-Q under “Risk Factors.” Therefore, actual
results may differ materially from those expressed or forecasted in any
such forward-looking statements. Forward-looking statements speak only
as of the date of this press release or as of the date they were made.
G&W does not undertake, and expressly disclaims, any duty to publicly
update any forward-looking statement, whether as a result of new
information, future events, or otherwise, except as required by law.

1.

Adjusted operating income, adjusted operating ratio, adjusted net
income attributable to G&W, adjusted diluted earnings per common
share (EPS) and the adjusted free cash flow measures of adjusted net
cash provided by operating activities attributable to G&W, adjusted
free cash flow attributable to G&W and adjusted free cash flow
attributable to G&W before new business investments and grant funded
projects are non-GAAP financial measures and are not intended to
replace financial measures calculated in accordance with GAAP. The
information required by Item 10(e) of Regulation S-K under the
Securities Act of 1933 and the Securities Exchange Act of 1934 and
Regulation G under the Securities Exchange Act of 1934, including a
reconciliation to their most directly comparable financial measures
calculated in accordance with GAAP, is included in the tables
attached to this press release.

2.

Foreign exchange impact is calculated by comparing the prior year
period results translated from local currency to U.S. dollars using
current period exchange rates to the prior period results in U.S.
dollars as reported.

GENESEE & WYOMING INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2018 AND 2017

(in thousands, except per share amounts)

(unaudited)

Three Months Ended

Twelve Months Ended

December 31,

December 31,

2018

2017

2018

2017

OPERATING REVENUES

$

575,595

$

571,576

$

2,348,550

$

2,208,044

OPERATING EXPENSES

469,941

465,070

1,925,038

1,816,063

OPERATING INCOME

105,654

106,506

423,512

391,981

INTEREST INCOME

1,757

811

3,256

2,082

INTEREST EXPENSE

(27,114

)

(26,860

)

(107,719

)

(107,291

)

OTHER INCOME/(LOSS), NET

49

4,228

(188

)

8,747

INCOME BEFORE INCOME TAXES

80,346

84,685

318,861

295,519

(PROVISION FOR)/BENEFIT FROM INCOME TAXES

(22,966

)

343,291

(64,535

)

261,259

NET INCOME

57,380

427,976

254,326

556,778

LESS:

NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST

1,818

1,410

9,908

7,727

NET INCOME ATTRIBUTABLE TO GENESEE & WYOMING INC.

$

55,562

$

426,566

$

244,418

$

549,051

BASIC EARNINGS PER COMMON SHARE ATTRIBUTABLE TO GENESEE & WYOMING
INC. COMMON STOCKHOLDERS

$

0.96

$

6.90

$

4.09

$

8.92

WEIGHTED AVERAGE SHARES - BASIC

58,093

61,780

59,745

61,579

DILUTED EARNINGS PER COMMON SHARE ATTRIBUTABLE TO GENESEE & WYOMING
INC. COMMON STOCKHOLDERS

$

0.94

$

6.81

$

4.03

$

8.79

WEIGHTED AVERAGE SHARES - DILUTED

58,892

62,676

60,628

62,464

GENESEE & WYOMING INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31, 2018 AND 2017

(in thousands)

(unaudited)

December 31,

2018

2017

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$

90,387

$

80,472

Accounts receivable, net

426,305

416,705

Materials and supplies

56,716

57,750

Prepaid expenses and other

54,185

34,606

Total current assets

627,593

589,533

PROPERTY AND EQUIPMENT, net

4,613,014

4,656,921

GOODWILL

1,115,849

1,165,587

INTANGIBLE ASSETS, net

1,430,197

1,567,038

DEFERRED INCOME TAX ASSETS, net

4,616

3,343

OTHER ASSETS, net

77,192

52,475

Total assets

$

7,868,461

$

8,034,897

LIABILITIES AND EQUITY

CURRENT LIABILITIES:

Current portion of long-term debt

$

28,303

$

27,853

Accounts payable

288,070

253,993

Accrued expenses

165,280

185,935

Total current liabilities

481,653

467,781

LONG-TERM DEBT, less current portion

2,425,235

2,303,442

DEFERRED INCOME TAX LIABILITIES, net

877,721

873,194

DEFERRED ITEMS - grants from outside parties

326,520

321,592

OTHER LONG-TERM LIABILITIES

127,280

172,796

TOTAL EQUITY

3,630,052

3,896,092

Total liabilities and equity

$

7,868,461

$

8,034,897

GENESEE & WYOMING INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2018 AND 2017

(in thousands)

(unaudited)

Twelve Months Ended

December 31,

2018

2017

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income

$

254,326

$

556,778

Adjustments to reconcile net income to net cash provided by
operating activities:

Depreciation and amortization

263,216

250,457

Stock-based compensation

17,652

17,554

Deferred income taxes

23,373

(319,249

)

Net (gain)/loss on sale and impairment of assets

(3,246

)

4,254

Changes in assets and liabilities which (used) provided cash, net of
effect of acquisitions:

Expenditures for additions to property & equipment, net of grants
from outside parties

$

86,139

$

75,116

$

263,575

$

208,223

(a)

Includes $0.5 million of corporate development and related costs for
the twelve months ended December 31, 2018. Includes $3.2 million of
corporate development and related costs for the twelve months ended
December 31, 2017.

(b)

Includes $1.1 million reduction to expense related to U.K coal
restructuring and related charges for both the three and twelve
months ended December 31, 2017.

(c)

Includes $0.2 million and $0.5 million of corporate development and
related costs for the three and twelve months ended December 31,
2018, respectively. Includes $0.1 million and $0.5 million of
corporate development and related costs for the three and twelve
months ended December 31, 2017, respectively.

(d)

Includes an impairment charge of $5.8 million associated with our
Australia business for both the three and twelve months ended
December 31, 2017.

(e)

Includes a $7.3 million gain on settlement related to Arrium
Limited's voluntary administration for the twelve months ended
December 31, 2018. Includes a $0.3 million and $0.1 million
reduction of corporate development and related costs for the three
and twelve months ended December 31, 2018, respectively. Includes
$0.9 million and $8.2 million of corporate development and related
costs for the three and twelve months ended December 31, 2017,
respectively. Includes $0.9 million recovery of prior year
impairment and related costs associated with Arrium's voluntary
administration for both the three and twelve months ended December
31, 2017. Includes an $8.9 million reduction to expense as a result
of a buyout of the Freightliner deferred consideration agreements
for both the three and twelve months ended December 31, 2017.

GENESEE & WYOMING INC. AND SUBSIDIARIES

NORTH AMERICAN OPERATIONS SELECTED CONSOLIDATED FINANCIAL
INFORMATION

(dollars in thousands)

(unaudited)

Three Months Ended December 31,

Twelve Months Ended December 31,

2018

2017

2018

2017

Amount

% ofRevenue

Amount

% ofRevenue

Amount

% ofRevenue

Amount

% ofRevenue

Operating revenues:

Freight revenues

$

258,832

76.6

%

$

241,734

75.5

%

$

1,037,549

76.4

%

$

961,356

75.4

%

Freight-related revenues

63,818

18.9

%

62,809

19.6

%

257,162

18.9

%

249,623

19.6

%

All other revenues

15,324

4.5

%

15,665

4.9

%

64,159

4.7

%

63,306

5.0

%

Total operating revenues

$

337,974

100.0

%

$

320,208

100.0

%

$

1,358,870

100.0

%

$

1,274,285

100.0

%

Operating expenses:

Labor and benefits
[(a)]

$

103,631

30.7

%

$

101,166

31.6

%

$

432,777

31.9

%

$

416,098

32.7

%

Equipment rents

12,999

3.8

%

13,146

4.1

%

54,573

4.0

%

53,139

4.2

%

Purchased services
[(b)]

16,576

4.9

%

14,465

4.5

%

60,126

4.4

%

59,815

4.7

%

Depreciation and amortization

42,359

12.5

%

40,184

12.6

%

165,625

12.2

%

158,006

12.4

%

Diesel fuel used in train operations

25,015

7.4

%

22,814

7.1

%

96,978

7.1

%

76,852

6.0

%

Casualties and insurance

9,829

2.9

%

10,730

3.4

%

33,078

2.4

%

37,262

2.9

%

Materials

13,509

4.0

%

11,344

3.6

%

52,698

3.9

%

49,757

3.9

%

Trackage rights

10,373

3.1

%

9,905

3.1

%

40,598

3.0

%

38,637

3.0

%

Net (gain)/loss on sale and impairment of assets

(648

)

(0.2

)%

(586

)

(0.2

)%

(2,772

)

(0.2

)%

(1,456

)

(0.1

)%

Restructuring and related costs

11

—

%

83

—

%

53

—

%

467

—

%

Other expenses
[(c)]

17,126

5.1

%

22,250

6.9

%

82,024

6.1

%

81,456

6.4

%

Total operating expenses

$

250,780

74.2

%

$

245,501

76.7

%

$

1,015,758

74.8

%

$

970,033

76.1

%

Operating income

$

87,194

$

74,707

$

343,112

$

304,252

Expenditures for additions to property & equipment, net of grants
from outside parties

$

53,038

$

60,745

$

182,645

$

166,685

(a)

Includes $0.5 million of corporate development and related costs
for the twelve months ended December 31, 2018. Includes $3.1
million of corporate development and related costs for the twelve
months ended December 31, 2017, primarily associated with
severance costs related to the integration of the Providence and
Worcester Railroad Company.

(b)

Includes $0.1 million of corporate development and related costs for
the twelve months ended December 31, 2017.

(c)

Includes $0.2 million of corporate development and related costs
for the twelve months ended December 31, 2018. Includes $0.8
million and $5.0 million of corporate development and related
costs for the three and twelve months ended December 31, 2017,
respectively.

GENESEE & WYOMING INC. AND SUBSIDIARIES

AUSTRALIAN OPERATIONS SELECTED CONSOLIDATED FINANCIAL INFORMATION*

(dollars in thousands)

(unaudited)

Three Months Ended December 31,

Twelve Months Ended December 31,

2018

2017

2018

2017

Amount

% ofRevenue

Amount

% ofRevenue

Amount

% ofRevenue

Amount

% ofRevenue

Operating revenues:

Freight revenues

$

60,687

85.3

%

$

63,622

84.3

%

$

255,022

84.5

%

$

254,653

82.8

%

Freight-related revenues

9,038

12.7

%

10,607

14.0

%

41,252

13.7

%

46,696

15.2

%

All other revenues

1,387

2.0

%

1,295

1.7

%

5,404

1.8

%

6,161

2.0

%

Total operating revenues

$

71,112

100.0

%

$

75,524

100.0

%

$

301,678

100.0

%

$

307,510

100.0

%

Operating expenses:

Labor and benefits

$

16,714

23.5

%

$

16,488

21.8

%

$

72,032

23.9

%

$

68,935

22.4

%

Equipment rents

1,255

1.7

%

1,362

1.8

%

5,205

1.7

%

5,577

1.8

%

Purchased services

5,019

7.1

%

6,448

8.5

%

24,622

8.2

%

26,269

8.6

%

Depreciation and amortization

14,534

20.4

%

15,227

20.2

%

60,766

20.1

%

61,142

19.9

%

Diesel fuel used in train operations

7,948

11.2

%

6,323

8.4

%

31,505

10.5

%

25,236

8.2

%

Casualties and insurance

1,359

1.9

%

1,283

1.7

%

6,557

2.2

%

5,502

1.8

%

Materials

2,549

3.6

%

2,077

2.7

%

11,274

3.7

%

10,706

3.5

%

Trackage rights

1,621

2.3

%

2,241

3.0

%

8,131

2.7

%

12,633

4.1

%

Net (gain)/loss on sale and impairment of assets
[(a)]

(136

)

(0.2

)%

5,856

7.7

%

(269

)

(0.1

)%

5,797

1.9

%

Restructuring and related costs

—

—

%

—

—

%

—

—

%

338

0.1

%

Other expenses
[(b)]

2,557

3.6

%

653

0.9

%

1,578

0.5

%

8,124

2.6

%

Total operating expenses

$

53,420

75.1

%

$

57,958

76.7

%

$

221,401

73.4

%

$

230,259

74.9

%

Operating income

$

17,692

$

17,566

$

80,277

$

77,251

Expenditures for additions to property & equipment, net of grants
from outside parties

$

14,786

$

6,355

$

42,722

$

16,076

*

Amounts shown represent 100% of our Australian Operations, which is
51.1% owned by G&W.

(a)

Includes the write down of track assets on idle branch lines in
South Australia of $5.8 million for both the three and twelve months
ended December 31, 2017.

(b)

Includes $7.3 million gain on settlement related to Arrium Limited's
voluntary administration for the twelve months ended December 31,
2018. Includes $0.1 million of corporate development and related
costs for the twelve months ended December 31, 2018. Includes a $0.3
million reduction of corporate development and related costs for the
twelve months ended December 31, 2017 associated with a refund.
Includes a $0.9 million recovery of prior year impairment and
related costs associated with Arrium's voluntary administration for
both the three and twelve months ended December 31, 2017.

GENESEE & WYOMING INC. AND SUBSIDIARIES

U.K./EUROPEAN OPERATIONS SELECTED CONSOLIDATED FINANCIAL
INFORMATION

(dollars in thousands)

(unaudited)

Three Months Ended December 31,

Twelve Months Ended December 31,

2018

2017

2018

2017

Amount

% ofRevenue

Amount

% ofRevenue

Amount

% ofRevenue

Amount

% ofRevenue

Operating revenues:

Freight revenues

$

81,701

49.1

%

$

86,884

49.4

%

$

349,894

50.9

%

$

337,866

53.9

%

Freight-related revenues

69,690

41.8

%

72,354

41.1

%

273,181

39.7

%

237,332

37.9

%

All other revenues

15,118

9.1

%

16,606

9.5

%

64,927

9.4

%

51,051

8.2

%

Total operating revenues

$

166,509

100.0

%

$

175,844

100.0

%

$

688,002

100.0

%

$

626,249

100.0

%

Operating expenses:

Labor and benefits
[(a)]

$

49,983

30.0

%

$

48,175

27.4

%

$

204,926

29.8

%

$

181,732

29.0

%

Equipment rents
[(b)]

19,739

11.8

%

17,996

10.2

%

78,429

11.4

%

74,187

11.8

%

Purchased services
[(c)]

34,444

20.7

%

46,848

26.7

%

150,155

21.8

%

158,035

25.3

%

Depreciation and amortization

9,196

5.5

%

8,537

4.9

%

36,825

5.3

%

31,309

5.0

%

Diesel fuel used in train operations

13,987

8.4

%

12,572

7.1

%

55,954

8.1

%

45,339

7.2

%

Electricity used in train operations

2,583

1.5

%

1,449

0.8

%

9,603

1.4

%

7,521

1.2

%

Casualties and insurance

1,484

0.9

%

1,634

0.9

%

5,899

0.9

%

4,229

0.7

%

Materials

15,434

9.3

%

16,237

9.2

%

65,109

9.5

%

47,056

7.5

%

Trackage rights

8,630

5.2

%

8,692

5.0

%

39,014

5.7

%

36,220

5.8

%

Net loss/(gain) on sale and impairment of assets

39

—

%

80

—

%

(205

)

—

%

(87

)

—

%

Restructuring and related costs

2,146

1.3

%

1,333

0.8

%

15,035

2.2

%

9,355

1.5

%

Other expenses
[(d)]

8,076

4.9

%

(1,942

)

(1.1

)%

27,135

3.9

%

20,875

3.3

%

Total operating expenses

$

165,741

99.5

%

$

161,611

91.9

%

$

687,879

100.0

%

$

615,771

98.3

%

Operating income

$

768

$

14,233

$

123

$

10,478

Expenditures for additions to property & equipment, net of grants
from outside parties

$

18,315

$

8,016

$

38,208

$

25,462

(a)

Includes $0.1 million of corporate development and related costs for
the twelve months ended December 31, 2017.

(b)

Includes a $1.1 million reduction to expense related to U.K coal
restructuring and related charges for both the three and twelve
months ended December 31, 2017.

(c)

Includes $0.2 million and $0.5 million of corporate development and
related costs for the three and twelve months ended December 31,
2018, respectively. Includes $0.1 million and 0.4 million of
corporate development and related costs for the three and twelve
months ended December 31, 2017, respectively, associated with the
acquisition and integration of Pentalver.

(d)

Includes a $0.3 million and $0.4 million reduction of corporate
development and related costs for the three and twelve months
ended December 31, 2018, respectively. Includes $0.1 million and
$3.4 million of corporate development and related costs for the
three and twelve months ended December 31, 2017, respectively,
associated with the acquisition and integration of Pentalver.
Includes an $8.9 million reduction to expense as a result of a
buyout of the Freightliner deferred consideration agreements for
both the three and twelve months ended December 31, 2017.

GENESEE & WYOMING INC. AND SUBSIDIARIES

FREIGHT REVENUES, CARLOADS AND AVERAGE REVENUES PER CARLOAD

COMPARISON BY COMMODITY GROUP

(dollars in thousands, except average revenues per carload)

(unaudited)

Three Months Ended December 31, 2018

North American Operations

Australian Operations*

U.K./European Operations

Total Operations

Commodity Group

FreightRevenues

Carloads**

AverageRevenuesPerCarload

FreightRevenues

Carloads**

AverageRevenuesPerCarload

FreightRevenues

Carloads**

AverageRevenuesPerCarload

FreightRevenues

Carloads**

AverageRevenuesPerCarload

Agricultural Products

$

31,202

51,768

$

603

$

2,996

3,532

$

848

$

1,494

1,105

$

1,352

$

35,692

56,405

$

633

Autos & Auto Parts

4,882

7,604

642

—

—

—

—

—

—

4,882

7,604

642

Chemicals & Plastics

38,134

43,381

879

—

—

—

—

—

—

38,134

43,381

879

Coal & Coke

21,124

63,725

331

29,093

92,717

314

2,955

5,319

556

53,172

161,761

329

Food & Kindred Products

8,774

15,129

580

—

—

—

—

—

—

8,774

15,129

580

Intermodal

462

4,318

107

17,397

14,395

1,209

56,904

181,466

314

74,763

200,179

373

Lumber & Forest Products

21,566

34,043

633

—

—

—

—

—

—

21,566

34,043

633

Metallic Ores

3,124

3,991

783

9,038

6,816

1,326

—

—

—

12,162

10,807

1,125

Metals

30,788

38,321

803

—

—

—

—

—

—

30,788

38,321

803

Minerals & Stone

33,188

51,179

648

2,026

16,609

122

19,733

46,233

427

54,947

114,021

482

Petroleum Products

21,307

29,709

717

137

58

2,362

615

2,288

269

22,059

32,055

688

Pulp & Paper

31,254

42,886

729

—

—

—

—

—

—

31,254

42,886

729

Waste

7,733

14,946

517

—

—

—

—

—

—

7,733

14,946

517

Other

5,294

17,388

304

—

—

—

—

—

—

5,294

17,388

304

Totals

$

258,832

418,388

$

619

$

60,687

134,127

$

452

$

81,701

236,411

$

346

$

401,220

788,926

$

509

Three Months Ended December 31, 2017

North American Operations

Australian Operations*

U.K./European Operations

Total Operations

Commodity Group

FreightRevenues

Carloads**

AverageRevenuesPerCarload

FreightRevenues

Carloads**

AverageRevenuesPerCarload

FreightRevenues

Carloads**

AverageRevenuesPerCarload

FreightRevenues

Carloads**

AverageRevenuesPerCarload

Agricultural Products

$

31,329

51,679

$

606

$

4,825

8,105

$

595

$

1,748

1,323

$

1,321

$

37,902

61,107

$

620

Autos & Auto Parts

5,882

9,541

616

—

—

—

—

—

—

5,882

9,541

616

Chemicals & Plastics

36,592

43,041

850

—

—

—

—

—

—

36,592

43,041

850

Coal & Coke

18,812

53,614

351

31,386

88,306

355

2,508

4,070

616

52,706

145,990

361

Food & Kindred Products

8,568

15,216

563

—

—

—

—

—

—

8,568

15,216

563

Intermodal

254

2,525

101

17,320

14,695

1,179

63,691

220,881

288

81,265

238,101

341

Lumber & Forest Products

22,297

35,836

622

—

—

—

—

—

—

22,297

35,836

622

Metallic Ores

2,872

4,085

703

7,820

5,344

1,463

—

—

—

10,692

9,429

1,134

Metals

25,182

32,392

777

—

—

—

—

—

—

25,182

32,392

777

Minerals & Stone

33,065

53,552

617

2,091

16,478

127

18,937

47,733

397

54,093

117,763

459

Petroleum Products

17,692

24,593

719

180

71

2,535

—

—

—

17,872

24,664

725

Pulp & Paper

27,763

41,041

676

—

—

—

—

—

—

27,763

41,041

676

Waste

6,063

12,620

480

—

—

—

—

—

—

6,063

12,620

480

Other

5,363

15,687

342

—

—

—

—

—

—

5,363

15,687

342

Totals

$

241,734

395,422

$

611

$

63,622

132,999

$

478

$

86,884

274,007

$

317

$

392,240

802,428

$

489

* Australian Operations is 51.1% owned by G&W as of December 1, 2016.

** Represents physical railcars and the estimated railcar
equivalents of commodities transported by metric ton or other
measure, as well as intermodal units.

GENESEE & WYOMING INC. AND SUBSIDIARIES

FREIGHT REVENUES, CARLOADS AND AVERAGE REVENUES PER CARLOAD

COMPARISON BY COMMODITY GROUP

(dollars in thousands, except average revenues per carload)

(unaudited)

Twelve Months Ended December 31, 2018

North American Operations

Australian Operations*

U.K./European Operations

Total Operations

Commodity Group

FreightRevenues

Carloads**

AverageRevenuesPerCarload

FreightRevenues

Carloads**

AverageRevenuesPerCarload

FreightRevenues

Carloads**

AverageRevenuesPerCarload

FreightRevenues

Carloads**

AverageRevenuesPerCarload

Agricultural Products

$

122,832

208,283

$

590

$

18,635

37,348

$

499

$

4,567

3,454

$

1,322

$

146,034

249,085

$

586

Autos & Auto Parts

21,568

34,150

632

—

—

—

—

—

—

21,568

34,150

632

Chemicals & Plastics

151,759

175,911

863

—

—

—

—

—

—

151,759

175,911

863

Coal & Coke

83,162

255,351

326

125,599

393,664

319

11,706

19,523

600

220,467

668,538

330

Food & Kindred Products

34,361

60,531

568

—

—

—

—

—

—

34,361

60,531

568

Intermodal

1,665

16,140

103

68,010

55,716

1,221

249,317

781,306

319

318,992

853,162

374

Lumber & Forest Products

91,928

145,354

632

—

—

—

—

—

—

91,928

145,354

632

Metallic Ores

13,940

17,490

797

33,808

23,737

1,424

—

—

—

47,748

41,227

1,158

Metals

126,579

158,117

801

—

—

—

—

—

—

126,579

158,117

801

Minerals & Stone

140,310

221,527

633

8,273

66,176

125

83,582

188,810

443

232,165

476,513

487

Petroleum Products

74,177

105,940

700

697

284

2,454

722

2,530

285

75,596

108,754

695

Pulp & Paper

121,600

170,408

714

—

—

—

—

—

—

121,600

170,408

714

Waste

29,049

57,623

504

—

—

—

—

—

—

29,049

57,623

504

Other

24,619

74,148

332

—

—

—

—

—

—

24,619

74,148

332

Totals

$

1,037,549

1,700,973

$

610

$

255,022

576,925

$

442

$

349,894

995,623

$

351

$

1,642,465

3,273,521

$

502

Twelve Months Ended December 31, 2017

North American Operations

Australian Operations*

U.K./European Operations

Total Operations

Commodity Group

FreightRevenues

Carloads**

AverageRevenuesPerCarload

FreightRevenues

Carloads**

AverageRevenuesPerCarload

FreightRevenues

Carloads**

AverageRevenuesPerCarload

FreightRevenues

Carloads**

AverageRevenuesPerCarload

Agricultural Products

$

124,285

209,471

$

593

$

22,562

51,909

$

435

$

5,280

4,359

$

1,211

$

152,127

265,739

$

572

Autos & Auto Parts

22,901

37,246

615

—

—

—

—

—

—

22,901

37,246

615

Chemicals & Plastics

148,252

177,602

835

—

—

—

—

—

—

148,252

177,602

835

Coal & Coke

75,935

224,278

339

117,678

359,791

327

9,972

22,403

445

203,585

606,472

336

Food & Kindred Products

33,424

59,307

564

—

—

—

—

—

—

33,424

59,307

564

Intermodal

980

9,838

100

69,433

58,848

1,180

253,854

890,844

285

324,267

959,530

338

Lumber & Forest Products

87,200

140,856

619

—

—

—

—

—

—

87,200

140,856

619

Metallic Ores

13,391

17,925

747

37,415

29,458

1,270

—

—

—

50,806

47,383

1,072

Metals

103,863

136,888

759

—

—

—

—

—

—

103,863

136,888

759

Minerals & Stone

130,511

214,469

609

6,878

51,872

133

68,760

174,943

393

206,149

441,284

467

Petroleum Products

68,388

98,414

695

687

277

2,480

—

—

—

69,075

98,691

700

Pulp & Paper

107,453

161,872

664

—

—

—

—

—

—

107,453

161,872

664

Waste

25,063

52,081

481

—

—

—

—

—

—

25,063

52,081

481

Other

19,710

62,935

313

—

—

—

—

—

—

19,710

62,935

313

Totals

$

961,356

1,603,182

$

600

$

254,653

552,155

$

461

$

337,866

1,092,549

$

309

$

1,553,875

3,247,886

$

478

* Australian Operations is 51.1% owned by G&W as of December 1, 2016.

** Represents physical railcars and the estimated railcar
equivalents of commodities transported by metric ton or other
measure, as well as intermodal units.

Non-GAAP Financial Measures

This earnings release contains references to adjusted operating income,
adjusted operating ratio, adjusted net income attributable to G&W,
adjusted diluted earnings per common share (EPS) and the adjusted free
cash flow measures of adjusted net cash provided by operating activities
attributable to G&W, adjusted free cash flow attributable to G&W and
adjusted free cash flow attributable to G&W before new business
investments and grant funded projects, which are “non-GAAP financial
measures” as this term is defined in Item 10(e) of Regulation S-K under
the Securities Act of 1933 and the Securities Exchange Act of 1934 and
Regulation G under the Securities Exchange Act of 1934. In accordance
with these rules, G&W has reconciled these non-GAAP financial measures
to their most directly comparable U.S. GAAP measures.

Management views these non-GAAP financial measures as important measures
of G&W’s operating performance or, in the case of the adjusted free cash
flow measures, a useful indicator of cash flow that may be available for
discretionary use by G&W. Management also views these non-GAAP financial
measures as a way to assess comparability between periods. Key
limitations of the adjusted free cash flow measures include the
assumptions that G&W will be able to refinance its existing debt when it
matures and meet other cash flow obligations from financing activities,
such as principal payments on debt.

These non-GAAP financial measures are not intended to represent, and
should not be considered more meaningful than, or as an alternative to,
their most directly comparable GAAP measures. These non-GAAP financial
measures may be different from similarly-titled non-GAAP financial
measures used by other companies.

The following tables set forth reconciliations of each of these non-GAAP
financial measures to their most directly comparable GAAP measure (in
millions, except percentages and per share amounts).

Reconciliations of Non-GAAP Financial Measures

Adjusted Operating Income

Three Months Ended

December 31, 2018

NorthAmericanOperations

AustralianOperations

U.K./EuropeanOperations

TotalOperations

Operating revenues

$

338.0

$

71.1

$

166.5

$

575.6

Operating expenses

250.8

53.4

165.7

469.9

Operating income
[(a)]

$

87.2

$

17.7

$

0.8

$

105.7

Operating ratio
[(b)]

74.2

%

75.1

%

99.5

%

81.6

%

Operating expenses

$

250.8

$

53.4

$

165.7

$

469.9

Restructuring and related costs

—

—

(2.1

)

(2.2

)

Canadian railroad lease return costs

(2.1

)

—

—

(2.1

)

Adjusted operating expenses

$

248.7

$

53.4

$

163.7

$

465.7

Adjusted operating income

$

89.3

$

17.7

$

2.8

$

109.9

Adjusted operating ratio

73.6

%

75.1

%

98.3

%

80.9

%

Three Months Ended

December 31, 2017

NorthAmericanOperations

AustralianOperations

U.K./EuropeanOperations

TotalOperations

Operating revenues

$

320.2

$

75.5

$

175.8

$

571.6

Operating expenses

245.5

58.0

161.6

465.1

Operating income
[(a)]

$

74.7

$

17.6

$

14.2

$

106.5

Operating ratio
[(b)]

76.7%

76.7%

91.9%

81.4%

Operating expenses

$

245.5

$

58.0

$

161.6

$

465.1

Australia impairment and related costs

—

(4.9)

—

(4.9)

Restructuring costs

(0.1)

—

(1.3)

(1.4)

Corporate development and related costs

(0.9)

—

(0.3)

(1.1)

Buyout of Freightliner deferred consideration agreements

—

—

8.9

8.9

U.K. coal restructuring and related charges

—

—

1.1

1.1

Adjusted operating expenses

$

244.6

$

53.0

$

170.0

$

467.6

Adjusted operating income

$

75.6

$

22.5

$

5.9

$

104.0

Adjusted operating ratio

76.4%

70.2%

96.7%

81.8%

Twelve Months Ended

December 31, 2018

NorthAmericanOperations

AustralianOperations

U.K./EuropeanOperations

TotalOperations

Operating revenues

$

1,358.9

$

301.7

$

688.0

$

2,348.6

Operating expenses

1,015.8

221.4

687.9

1,925.0

Operating income
[(a)]

$

343.1

$

80.3

$

0.1

$

423.5

Operating ratio
[(b)]

74.8%

73.4%

100.0%

82.0%

Operating expenses

$

1,015.8

$

221.4

$

687.9

$

1,925.0

Restructuring and related costs

(0.1)

—

(15.0)

(15.1)

Canadian railroad lease return costs

(2.1)

—

—

(2.1)

Corporate development and related costs

(0.7)

(0.1)

(0.1)

(0.8)

Credit facility refinancing-related costs

(0.4)

—

—

(0.4)

Gain on settlement

—

7.3

—

7.3

Adjusted operating expenses

$

1,012.5

$

228.6

$

672.7

$

1,913.9

Adjusted operating income

$

346.3

$

73.1

$

15.3

$

434.7

Adjusted operating ratio

74.5%

75.8%

97.8%

81.5%

Twelve Months Ended

December 31, 2017

NorthAmericanOperations

AustralianOperations

U.K./EuropeanOperations

TotalOperations

Operating revenues

$

1,274.3

$

307.5

$

626.2

$

2,208.0

Operating expenses

970.0

230.3

615.8

1,816.1

Operating income
[(a)]

$

304.3

$

77.3

$

10.5

$

392.0

Operating ratio
[(b)]

76.1

%

74.9

%

98.3

%

82.2

%

Operating expenses

$

970.0

$

230.3

$

615.8

$

1,816.1

Corporate development and related costs

(8.2

)

0.3

(4.0

)

(11.9

)

Restructuring costs

(0.5

)

(0.3

)

(9.4

)

(10.2

)

Australia impairment and related costs

—

(4.9

)

—

(4.9

)

Buyout of Freightliner deferred consideration agreements

—

—

8.9

8.9

U.K. coal restructuring and related charges

—

—

1.1

1.1

Adjusted operating expenses

$

961.3

$

225.3

$

612.4

$

1,799.0

Adjusted operating income

$

312.9

$

82.2

$

13.8

$

409.0

Adjusted operating ratio

75.4

%

73.3

%

97.8

%

81.5

%

(a)

Operating income is calculated as operating revenues less operating
expenses.

Adjusted free cash flow attributable to G&W before new business
investments and grant funded projects

$

326.0

$

269.8

(a)

Allocation of adjusted cash flow to noncontrolling interest
(MIRA's 48.9% equity ownership of GWA since December 1, 2016) is
calculated as 48.9% of the total of (i) cash flow provided by
operating activities of G&W’s Australian Operations, less (ii) net
purchases of property and equipment of G&W’s Australian
Operations. The timing and amount of actual distributions, if any,
from GWA to G&W and MIRA made in any given period will vary and
could differ materially from the amounts presented. During the
twelve months ended December 31, 2018, GWA made A$65.0 million of
such distributions of which A$33.2 million (or $24.6 million at
the applicable exchange rates at the time the payments were made)
and A$31.8 million (or $23.6 million at the applicable exchange
rates at the time the payments were made) was distributed to G&W
and MIRA, respectively, and no such distributions were made for
the twelve months ended December 31, 2017. G&W expressly disclaims
any direct correlation between the allocation of adjusted cash
flow to noncontrolling interest and actual distributions made in
any given period.

(b)

See breakout below.

Twelve Months Ended December 31, 2018

CoreCapital
[(1)]

New BusinessInvestments

GrantFundedProjects
[(2)]

Total

Purchase of property and equipment

$

(218.2

)

$

(44.0

)

$

(21.9

)

$

(284.1

)

Grant proceeds from outside parties

—

—

20.5

20.5

Insurance proceeds for the replacement of assets

3.0

—

—

3.0

Proceeds from disposition of property and equipment

9.5

—

—

9.5

Purchase of property and equipment, net

$

(205.7

)

$

(44.0

)

$

(1.4

)

$

(251.1

)

Twelve Months Ended December 31, 2017

CoreCapital
[(1)]

New BusinessInvestments

GrantFundedProjects
[(2)]

Total

Purchase of property and equipment

$

(188.6

)

$

(8.7

)

$

(31.2

)

$

(228.5

)

Grant proceeds from outside parties

—

0.1

20.2

20.2

Insurance proceeds for the replacement of assets

1.6

—

—

1.6

Proceeds from disposition of property and equipment

5.2

—

—

5.2

Purchase of property and equipment, net

$

(181.8

)

$

(8.6

)

$

(11.0

)

$

(201.4

)

(1)

Core capital expenditures represent purchases of property and
equipment, as presented on the Consolidated Statement of Cash
Flows, less grant proceeds from outside parties, insurance
proceeds for the replacement of assets and proceeds from
disposition of property and equipment, each of which as presented
on the Consolidated Statement of Cash Flows, less new business
investments and grant funded projects.

(2)

Grant funded projects represents purchases of property and equipment
for projects partially or entirely funded by outside parties, net of
grant proceeds from outside parties as presented on the Consolidated
Statement of Cash Flows.

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